A recent report from Redfin, powered by Rocket, indicates that nearly one in five (19.8%) U.
S. homeowners with a mortgage could reduce their monthly payments by refinancing to a lower interest rate, marking the highest eligibility share in over four years. Despite this potential for savings, only 9.1% of eligible borrowers have opted to refinance.
The analysis, based on an average mortgage rate of 6.08% so far this year, defines “in-the-money” as a homeowner whose current mortgage rate is at least 50 basis points higher than the prevailing rate. This surge in refinancing eligibility, up from just 7% a year ago, is primarily attributed to two factors: a recent dip in mortgage rates to 6% in February and early March—the lowest in three and a half years—and a significant portion of homeowners holding higher rates, with 21.2% having a rate above 6% as of the third quarter of 2025. This is the first time in five years that more borrowers have a rate above 6% than below 3%.
For example, a homeowner who purchased a $500,000 home in October 2023, when rates reached a 20-year high of 7.8%, would have had a monthly mortgage payment of approximately $3,700 with a 20% down payment. Refinancing to a 6% rate could reduce this payment to about $3,200, saving $500 per month. Even with $10,000 in refinancing fees, these monthly savings could recoup the costs in less than two years, specifically 20 months.
Historical data shows similar refinancing opportunities. At the end of 2021, when mortgage rates averaged 3.08%, roughly two in five (39.4%) homeowners could have benefited from refinancing. The “in-the-money” share peaked at nearly 70% at the end of 2020, as mortgage rates fell to 2.76% during the pandemic.
Despite the substantial potential for savings, only 9.1% of homeowners eligible to refinance to today’s average rate of 6.08% have done so as of the first quarter of this year. This represents the lowest “take-up rate” for eligible homeowners since early 2020. Across all mortgaged homeowners in the U.
S., 1.8% refinanced during the first quarter.
Bill Banfield, chief business officer at Rocket, commented on the situation, stating, “For homeowners who are in the money, refinancing now could meaningfully lower monthly payments and total interest costs over the life of the home loan. Even a modest rate reduction can add up to big savings, helping free up cash, build equity faster, or better weather future financial uncertainty. Homeowners may also consider whether refinancing could have advantages other than putting money back in their pocketbooks every month. For instance, they could consider consolidating debt or changing their loan type. Some people take advantage of lower rates to change the length of their loan and pay it off faster while keeping essentially the same monthly payment.”Several factors contribute to the low take-up rate. Some homeowners may be waiting for rates to drop further, even though rates can fluctuate and could potentially rise. The option to refinance again if rates fall significantly more also exists. Limited awareness is another factor, as many borrowers may not regularly review their mortgage options or realize they could save money. Furthermore, while closing costs and fees can appear substantial, the monthly interest savings can often offset these costs relatively quickly.
During the pandemic, when mortgage rates remained below 3% for much of 2020 and 2021, the take-up rate for eligible borrowers consistently hovered around one in ten per quarter, peaking at 13.5% in the first quarter of 2021 when the average rate was 2.88%. While today’s quarterly take-up rate is similar to individual quarters during that period, over the entire eight-quarter span of 2020-2021, more than half of eligible borrowers refinanced. It is also worth noting that in the fourth quarter of 2023, when rates were at a two-decade high, the take-up rate jumped to 38%. However, this was due to only 1.3% of homeowners being eligible for a refinance at that time, meaning the actual number of homeowners who refinanced was much lower than the percentage suggests.
In the first quarter, Americans refinanced an estimated $223 billion worth of home loans. However, the report indicates that they could have refinanced approximately $2.24 trillion worth of home loans. This represents the total loan value held by the 90.9% of eligible homeowners who did not refinance.
Redfin, a technology-driven real estate company, operates the country’s most-visited real estate brokerage website. As part of Rocket Companies (NYSE: RKT), Redfin aims to create an integrated homeownership platform.
